Is Matador Resources Company (MTDR) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have gone over 730 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article we look at what those investors think of Matador Resources Company (NYSE:MTDR).

Matador Resources Company (NYSE:MTDR) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Our calculations also showed that MTDR isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are a multitude of metrics stock market investors put to use to appraise stocks. A couple of the best metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite investment managers can beat the market by a significant margin (see the details here).

Dmitry Balyasny

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a glance at the key hedge fund action encompassing Matador Resources Company (NYSE:MTDR).

Hedge fund activity in Matador Resources Company (NYSE:MTDR)

At Q2’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MTDR over the last 16 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with MTDR Positions

According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the biggest position in Matador Resources Company (NYSE:MTDR), worth close to $111.5 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Encompass Capital Advisors, led by Todd J. Kantor, holding a $40.7 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Ken Fisher’s Fisher Asset Management, Dmitry Balyasny’s Balyasny Asset Management and Chuck Royce’s Royce & Associates.

Judging by the fact that Matador Resources Company (NYSE:MTDR) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of fund managers who were dropping their full holdings last quarter. At the top of the heap, Principal Global Investors’s Columbus Circle Investors cut the largest position of the 750 funds monitored by Insider Monkey, valued at close to $0.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also sold off its stock, about $0.5 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Matador Resources Company (NYSE:MTDR) but similarly valued. These stocks are Franklin Electric Co., Inc. (NASDAQ:FELE), The RealReal, Inc. (NASDAQ:REAL), Mednax Inc. (NYSE:MD), and SVMK Inc. (NASDAQ:SVMK). All of these stocks’ market caps are closest to MTDR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FELE 14 224900 -1
REAL 33 101696 33
MD 18 269365 -5
SVMK 23 453141 3
Average 22 262276 7.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $262 million. That figure was $240 million in MTDR’s case. The RealReal, Inc. (NASDAQ:REAL) is the most popular stock in this table. On the other hand Franklin Electric Co., Inc. (NASDAQ:FELE) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Matador Resources Company (NYSE:MTDR) is even less popular than FELE. Hedge funds dodged a bullet by taking a bearish stance towards MTDR. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MTDR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MTDR investors were disappointed as the stock returned -16.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.